21 - 25 FEBRUARY 2021

DUBAI WORLD TRADE CENTRE

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Webinar Summary

Webinar Summary

Reinventing the HORECA scene

Coming out of long months of a quasi-global lockdown, the HORECA industry, still mostly convalescent is finding back its footing as places such as the UAE are ready and eager to safely welcome back international visitors. Gulfood Virtual on behalf of GulfHost invited five food services experts to share their experiences through the last few months as well as their ambitions and expectations for a successful recovery.

Moderated by Devina Divecha, journalist and consultant, the panel included His Highness Prince AlWaleed Bin Nassir - President of the Saudi Restaurants Association, Duncan Fraser Smith - Founder and Managing Partner for The Cutting Edge Agency, Peter Schatzberg - Founder and CEO for Sweetheart Kitchen, Steve Pyle – CEO Chef Middle East and Ekta Bhojwani, VP Consumer and Partnerships for Kitopi.

Kicking off the conversation Divecha asked the panel to talk about the impact the COVID-19 pandemic had on their respective businesses.

ekta
“We are in the cloud kitchen business”, started Ekta Bhojwani “we serve the GCC and focus on delivery. After an initial dip where we felt consumers being a bit hesitant about ordering online. We did a fair bit of research and realized that people were already changing habits because they were concerned about their safety but in the last 4-6 weeks we are seeing a nice increase in delivery orders. We still feel a bit of hesitancy and the market did change but starting to see that recovery."
"The restaurants and cafes association in Saudi Arabia is a voice of the industry in the country and we try to build a community that works together for the betterment of the industry in the Saudi market" added His Highness Prince AlWaleed bin Nassir. "We have felt the impact like in any other country, especially when the lockdown was announced. While quick service were able to maintain some of their business through delivery which grew two fold, it proved difficult for the casual and fine dining segment." Prince AlWaleed continued saying that while today businesses are reopening, there is a change in habits even though customers are slowly coming back. "What is concerning right now is a rise in infections in Saudi, so we have to see how the government will handle it."
prince waleed
steve
Steve Pyle explained "We import and export food products for the HORECA sector within the UAE but also through the GCC. What we have seen is a 20 to 25% decline in business compared to what we expected to see. As His Highness mentioned, with casual and fine dining at a standstill it's just QSR and delivery driving some volumes. So the key challenges across the distributors would be aging inventory and lack of liquidity through the market place as cycles typically go up to 60 days now we see them pushed to up to 80 days."
Leading a concept development and execution agency for food and beverage in the Middle East and Australasia Duncan Fraser-Smith added "A word that sums up the last few months is brutal. What is interesting to see now is how different these two parts of the world are moving forward. The UAE and Dubai moving to a regrowth and relaunch phase, and I am sitting in Melbourne right now looking at another six weeks of lockdown because cases have spread. It is so diverse how F&B is being impacted across the board. Let's take Australia as an example where restaurants have mobilized a few weeks ago and invested in their staff, new foods and businesses for all of a sudden being told to shut down for another six weeks. It's crippling to the economy. It’s one thing that globally we will have to look at: Spikes, waves... as they occur in the marketplace ultimately this is something that will "revolutionize" the F&B industry going forward. There is no going back to the way things were."

duncan

Peter
Peter Schatzberg continued "We started in the Middle East only 11 months ago, so there is a lot of noise in our data because we were growing anyway. But as a delivery-only company we were well positioned for the pandemic and didn't see any decline in our volumes - even observed an increase at the beginning and now more of an increase as corona starts to subside in Dubai. It didn't impact us terribly like dine-in. We responded as an organisation and shifted a bit from scaling and expansion towards unit economics and profitability. I am in Europe now, and we are hopefully through the worst of it and what I am experiencing is consumers going back to completely normal dine in habits. I agree with Duncan, many of us are responding and we will continue to go in the direction of innovation and planning for future shutdowns for another year or two, and it will change things forever. On an optimistic note, in Europe behaviors are going back to normal very quickly in terms of dining."

Professionals and consumers attending the webinar were polled and asked the question - how quickly are you expecting business to go back to their pre-covid levels. 46% answered 6-12 months, while 24% feel like this is not happening for another two years.

Fraser-Smith commented the poll saying "There needs to be some levels of confidence and there needs to be global awareness as well. I don't think people should be treating this the same way they used to. We have a great opportunity to resume business and trade. While we are not going to see the same volumes of people on premises, I believe people are going to spend more when they go out. More so than they would have 12 months ago, knowing that they are dining out in a safe and secure environment. I am optimistic and believe that in another twelve months we should be in a much better position." "We'll see the survival of the fittest." commented Schatzberg. "Whether consumption restores to where it was, we will see a lot of smaller, not as sophisticated operators taken out. And those that make it through, either through persistence, cash reserves or innovation, will come back stronger as we anticipate a greater decline in F&B operators than we'll see in consumption. So more market shares to capture because of less competition." Prince Waleed added that the Saudi Government changed its stance in its handling the pandemic as earlier on, the plan was to focus solely on stopping the infection. Whereas now they realise that they need to balance their focus on protecting both our health and the economy. "I also second Duncan in our observations that the frequency of dine in went down but the average check is higher."
Steve Pyle commented that from a supplier standpoint, the next few months would also be an opportunity to enhance the relations between suppliers and operators, as with smaller numbers there is more room for more meaningful collaborations. Bhojwani added that they anticipate two levels of recovery as consumers who are satisfied with the safety measures will immediately resume their routine, and the other question affecting recovery is whether consumers will spend as much as they want, putting forward the matter of value for the customer. "People might go out less frequently and therefore choose a higher-end experience. In the delivery segment people are looking for more value. Plus people have been working from home so the lunchtime check is dropping."

How does reduced capacity affect businesses?

"In all the modeling we have done, it is almost impossible to break even at 20% capacity. 50-70% is about the break-line border for restaurants to see some positive cash returns and it is in fact more expensive for restaurants to mobilise for anything less than that." explained Fraser-Smith who used as an example UK and Australia whose job saving policies and investments could help some restaurants through the crisis and re-open at 20% capacity. Different countries have approached this differently and this ability to be dynamic and flexible is going to integrate every F&B outlet culture moving forward. Prince Waleed added that the Saudi Restaurants Association was able to effectively obtain from the government a certain leniency on capacity limitation for restaurants and cafes, mitigating this specific issues for operators in the Kingdom.

What kind of investments are required moving forward for businesses to flourish?

Speaking for Kitopi, Ekta Bhojwani answered that the first move was to make sure all certifications were up to date. As a cloud kitchen business it was also a matter of also investing in technologies such as thermal cameras to track fevers or automated cameras to prevent any violations and making sure that everyone on premises is wearing masks. Duncan Fraser Smith raised the question of how visible do operators need to make these sanitization efforts visible. "There is nothing worse than walking into a restaurant and having someone poke a thermometer at your forehead before sitting you down at your table." According to him, investments in sanitization should be in ways to monitor, track and test in ways that won't invade the dining experience. Other panelists agreed that there is a need to balance reassurance for the customers while not impacting the dining experience. "One of the initiatives the Saudi government is currently working on is the installation of public cameras inside restaurants kitchens." Announced Prince Waleed. "The challenge is how much are we willing to invest in technology if deep down we believe that the crisis won't last."

"Working in a cloud kitchen environment, we are actually more akin to a manufacturing facility than a restaurant kitchen, which allows us for more space, less contact between employees and it's easier for us to be more rigorous than a traditional kitchen environment. Having done business on three continents, I can say that the Middle Eastern requirements for hygiene rules and standards are far stricter than other places - even pre-corona." continued Schatzberg. "Adding cameras in the kitchens... well I don't know if consumers want to know what goes on behind the scenes" he mused, "but I agree - how far can you take it without ruining the experience? In virtual kitchens we have the liberties to have our staff working in hazmat suits without putting the customers off their experience while safeguarding them simultaneously. As a consumer I would want to enjoy my experience without the constant reminder of what we are in the middle of."

Also representing virtual kitchens, Bhojwani explained that while Kitopi does the cooking, the brands they cook for shoulder the communication to their end users, and get to control the communication around the hygiene and safety.  "What we found in our research is that consumers are not so much concerned about what's going on in the kitchen, but more concerned about the touchpoints such as the drivers, how the food is handled in transit etc. So we worked with our partners and aggregators to sometime identify drivers who need more training, supplying gloves and sanitization on the spot."

 

Fine dining has been more affected than casual dining - How is the future of fine dining looking?

Duncan Fraser-Smith observed that some some fine dining restaurants had increased their prices upon re-opening. Prince Waleed commented that restaurants in the Kingdom were seeing young diners coming back, and these are not traditionally target segments for fine dining. Panelists agreed that the price point increase on the higher end might create a vacuum for casual dining places: As consumers return to the restaurants, maybe less often than they used to, they will value the experience more than they used to and will be ready to spend more on a casual experience.

The webinar concluded on a Q&A with the audience and panelists shared some advice on strategic investments in marketing. They also discussed digital and contactless points of sales and finally reemphasized the need and urgency to create and deliver value for the consumer now more than ever.

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